Page 132 - InterloopAnnualReport2021

NOTES TO THE

FINANCIAL STATEMENTS

For the year ended June 30, 2021

27.2.1 Honourable Sindh High Court in its decision dated September 17, 2008 declared the imposition of
infrastructure cess before December 28, 2006 as void and invalid. However, the Excise and Taxation
Department filed an appeal before the Honourable Supreme Court of Pakistan. The Honourable
Supreme court of Pakistan had disposed off the appeal with a joint statement of the parties that
during the pendency of the appeal, another law i.e. fifth version came into existence which was not
the subject matter of the appeal hence the case was referred back to High Court of Sindh with right to
appeal to Supreme Court. The Company filed constitutional petition bearing No. 1809 of 2011 before
Honourable High Court Sindh. On May 31, 2011, the High Court of Sindh had granted an interim relief
on an application of petitioners on certain terms including discharge and return of bank guarantees /
security furnished on consignment released up to December 27, 2006 and any bank guarantee / security
furnished on consignment released after December 27, 2006 shall be encashed to the extent of 50% of
the guaranteed or secured amount only with balance kept intact till the disposal of petition. In case the
High Court upholds the applicability fifth version of law and its retrospective application, the authorities
are entitled to claim the amounts due under the said law with the right to appeal available to petitioner.
In the light of interim relief the Company has paid 50% of the amount of Infrastructure cess. Imports
of the Company are being released against 50% payment of Infrastructure cess to Excise and Taxation
Department and furnishing of bank guarantee of balance amount. On 4th June 2021, Honorable Sindh
High Court passed an order whereby it upheld the contention of Sindh Government and suspend its
own order for 90 days. The Company along with other entities has decided to file appeal against the said
order in Supreme Court of Pakistan.

The Government of Punjab imposed Punjab Infrastructure Development Levy in terms of the Punjab
Infrastructure Development Cess Act, 2015 (the Act) read with PRA Notification No.PRA/IDC/2015
dated May 16, 2016 and PRA order No.PRA/Orders.08/2015 dated May 23, 2016. The Company
being aggrieved filed writ petition vide WP No.24536 of 2016 before Honorable Lahore High Court
challenging the constitutionality of the Act . The Lahore High Court on July 28, 2016 granted interim
relief for clearance of goods subject to payment of 50% of the disputed amount and upon furnishing of a
bank guarantee for the balance of 50% of the amount. The case is pending litigation before Honorable
Lahore High Court, Lahore, the same has been adjourned without any next date.

The full amount of Infrastructure cess forms component of cost of imported items and provision recorded
in books. Bank guarantees furnished ragarding imposition of infrastructure cess have been disclosed in
note - 31.1 to these financial statements.

27.3 The investments out of provident fund have been made in accordance with the provisions of section 218
of the Companies Act, 2017 and conditions specified thereunder.

2021 2020
Note (Rupees ‘000) (Rupees ‘000)

27.4 Workers’ profit participation fund
Opening balance 113,577 285,500
Interest on funds utilized in the Company’s business 38 1,553 2,815
Expense allocation for the year 36 369,111 112,527
Capitalized in denim division – 1,050
484,241 401,892
Paid during the year (119,000) (288,315)
Closing balance 365,241 113,577

28. ACCRUED MARK UP
Mark up on:
Long term financing 57,426 85,523
Short term borrowings 164,248 105,613
221,674 191,136

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